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One of Europe's best-regarded hedge fund managers, Chris Hohn, told a conference yesterday that investors could as much as treble their money buying "really detested stocks" such as Porsche, where he has a long position, while he is short Italian car manufacturer Fiat.

Hohn is holding shares in Porsche

In a rare public appearance, Hohn, who founded UK hedge fund management firm TCI nine years ago and who has given £1bn to the children's charity he co-founded with his wife, said investors could make money if they were prepared to buy stocks that were unloved by the market, provided they had reason to believe the market was wrong and were prepared to hold their positions for some time.

Speaking at the inaugural Sohn London Investment Conference - a charity event organised by the Ira Sohn Foundation to raise money for paediatric cancer treatment and research - Hohn said: "Real deep value can be found in really detested companies. Sometimes you have to be deeply contrary, you have to hold your nose, even if it makes you feel sick. Sometimes great companies are deeply undervalued."

He told the conference delegates that, since January, he has been holding shares in Porsche, the German automotive holding company that owns vehicle manufacturer Volkswagen. With a market capitalisation of €15bn, just three times the value of its earnings, he described Porsche as "one of the cheapest stocks in the world" and said: "It could give you a triple in a small number of years."

This trebling of the share price could come about in four ways, he said. First, the value of Volkswagen could appreciate significantly, particularly given its global scale, exposure to emerging markets, its success in growing its market share - it is doubling the number of its dealers in China, he said - its high cash generation and that "it is run to make money".

Second, Porsche shares are trading at a discount of 40% to net asset value because of concerns about litigation from hedge funds that lost money shorting the company in 2008 - that year, Porsche revealed that it had used derivatives to build a significant position in Volkswagen, sending its share price rocketing. Some hedge funds are suing Porsche over its disclosure of this position. Hohn said: "The net claims amount to €5bn, we believe the hedge funds would settle for €1bn and the company would offer them €200m - nothing like the €6bn to €7bn discounted by the market."

Third, Porsche could reduce the discount by increasing its dividends. The fourth possibility is a full merger of Porsche and Volkswagen, with the other shareholders - predominantly families - selling their illiquid Volkswagen shares to Porsche. This might happen once the litigation has been resolved, he said.

In contrast, Hohn said he had a "significant short" position on Italian car manufacturer Fiat.

He said he expected that Fiat was going to need more capital. This, he said, was because Fiat, excluding its subsidiary Chrysler, is losing about €2bn of cash each year, an outflow he believes will increase as capital expenditure grows over the next two years.

He said he believes the company’s net debt is understated, and that the more important figure is the gross debt, which he said is €15bn, on which Fiat is paying 8% a year. He said the company’s net working capital of negative €9.5bn will reduce, and need replacing with debt or equity, as suppliers demand that it pay them more quickly.

He said Fiat had launched no new models lately. He said the chief executive is paid the main part of his remuneration for doing no more than keeping his job. He said: “It has been bankrupt twice. It is a bad company.”

Fiat declined to comment.

Hohn also said he has a long position in News Corporation. This company is the ultimate owner of Financial News.